Unintended Consequences

Organized labor is using state environmental law to make developers hire union workers. California housing advocates call it “CEQA abuse.”


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The proposed housing development at 227 27th St. would include 437 units.

In the past several months, Oakland has made key strides toward meeting its climate change goals of reducing greenhouse gas emissions by 36 percent by 2020 and by 83 percent by 2050. As noted in our November issue, the city is moving away from its car-centric past with new initiatives designed to promote biking, walking, and mass transit. But in the past few months, a new roadblock has emerged that is making it tougher for Oakland to reach its climate goals, while also promising to deepen the city’s housing crisis: Labor unions have been attempting to stymie nearly 1,500 units of new housing in downtown and Uptown unless developers agree to hire union workers.

As first reported in the San Francisco Business Times, developers say this move by labor is threatening to make housing projects too expensive to build in Oakland. If that were to happen, then the city’s housing crisis likely would worsen and displacement would escalate as home and apartment prices soar higher. “The downsides are very clear. By holding up projects, the number of homes that are produced is less than would otherwise be produced,” said Brian Hanlon, an Oakland resident and co-founder of the pro-housing group, California Renters Legal Advocacy and Education Fund. “The real solution to the housing crisis is to build a lot more.”

Hanlon and other pro-housing advocates say that while they’re sympathetic with the effort to raise wages for construction workers, they also disagree with the methods that labor is employing. Specifically, unions are using the state’s main environmental law, the California Environmental Quality Act, or CEQA, as a tool to extract so-called project labor agreements, or PLAs, from developers.

The unions have appealed the Oakland Planning Commission’s approval of several large housing projects this year, claiming they violate CEQA in myriad ways. In truth, however, unions plan to drop such CEQA complaints as soon as developers agree to their demands. Pro-housing advocates call this practice “CEQA abuse.”

According to a 2015 study by the law firm Holland & Knight, CEQA abuse is rampant. CEQA was originally designed to give environmental groups a weapon against polluters. But the study found that one of the most common targets of CEQA lawsuits is urban/infill housing, and such cases are often filed by groups that have no connection to environmental causes. In addition, numerous studies show that building denser housing in cities is pro-environment, because it helps reduce suburban sprawl.

Jennifer Hernandez, a Berkeley resident and lead author of the Holland & Knight study, noted that CEQA use by labor has another unintended consequence: Raising construction costs on housing increases the cost to rent or buy that housing, effectively making it too expensive for construction workers to live in. “Construction workers are being hosed in terms of their inability to afford homes near their jobs,” Hernandez noted. 

The four unions that have been using CEQA to block housing this year in Oakland are: the International Brotherhood of Electrical Workers (IBEW) Local 595; Sheet Metal Workers’ Local Union 104; Sprinkler Fitters Local 483; and United Association Local Union 342. They call themselves East Bay Residents for Responsible Development.

In 2016, they appealed city approvals of 416 units at 285 and 301 12th St.; 226 units at 13th and Alice streets; 437 units at 227 27th St.; 256 units at 2630 Broadway; and 126 units at 14th Street. Unions use CEQA to obtain PLAs because cities are prohibited by state and federal laws from requiring developers to hire union workers on projects on private land.

Courtesy of RAD Urban

1433 Webster St.

Jason Gumataotao, organizer of IBEW Local 595, said in an interview that unions aren’t just seeking PLAs for higher wages, but also plan to create union apprenticeships to train Oakland workers. “We’re trying to build an Oakland workforce,” he said. 

Currently, nonunion construction workers make about $25 an hour, while their union counterparts receive about $44 an hour, plus $28 in benefits. As a result, using union workers roughly triples the labor costs of a housing project.

Oakland developer RAD Urban is attempting to cut costs by proposing to use “modular” construction—prefabricated modules built at its Central Valley factory—for two housing towers it plans to erect in Oakland: a 176-unit high rise at 1433 Webster St. and a 350-unit tower at 2044 Franklin St. Randy Miller, president of RAD Urban, said in an interview that modular could reduce construction costs by up to 20 percent. However, organized labor is expected to oppose these projects, too, because they don’t involve union workers.

Earlier this year, Gov. Jerry Brown proposed a plan to reduce CEQA abuse by allowing urban infill housing developers to avoid appeals and lawsuits and build “by right” if they include affordable units in their projects. Some housing advocates also proposed that the plan include higher wages for workers. Developers opposed that provision, while organized labor blocked Brown’s plan, because it could not by law include a requirement that developers sign PLAs.

 

Published online on Dec. 5, 2016 at 8:00 a.m.

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